The 14 mortgage servicing firms hit by the enforcement actions brought by the Federal Reserve and the Office of the Comptroller of the Currency can expect to see soon a new process by which individual borrowers facing foreclosure can request an independent review, outgoing Acting Comptroller of the Currency John Walsh told industry representatives last week. “As we explored the best means of ensuring that injured homeowners had the opportunity to seek relief, it became clear that what was needed was a robust, transparent and accessible complaint process that will give borrowers the opportunity to request an independent foreclosure review,” Walsh said at a mortgage regulatory forum sponsored by SourceMedia. “I’m happy to say in the next several weeks you’ll see the roll out of just such a process.”

Among the sensitivities associated with the mortgage industry’s foreclosure struggles, none is more fraught with headline risk and the potential for political pressure than foreclosing on an active-duty servicemember of the U.S. military, a top industry attorney told compliance officials this week. “It’s bad enough when you get it wrong on a regular foreclosure action, but when you get it wrong for one of our servicemembers, that’s really where you’re going to have a reputation killer,” Leah Getlan, assistant general counsel at Capital One, told attendees this week at the Mortgage Bankers Association’s annual regulatory compliance conference in the nation’s capital. “I have seen it from time to time, but thankfully, not that often.”

New Jersey. In northern New Jersey, 8 percent of mortgages are in foreclosure – twice the share for the United States as a whole, according to a new regional mortgage brief prepared by the Federal Reserve Bank of New York. An additional 4 percent of northern New Jersey mortgages are at least 90 days delinquent, the point at which a foreclosure filing can be initiated. “Combined, 12 percent – or about one in eight mortgages – are seriously delinquent,” the Fed said. “By comparison, the pre-crisis share of mortgages seriously delinquent in this region was less than 2 percent.” But flows of mortgages into foreclosure and delinquency are down from their peak levels, although still considerably up from pre-crisis levels. However, the pool of mortgages already in foreclosure continues to grow because there are more loans entering the foreclosure process than there are loans completing the process each month. Foreclosures are lengthy, often taking many months or even years.

Banks and thrifts appear to be replenishing their first lien portfolio holdings while not taking on major amounts of new servicing, according to the Inside Mortgage Finance Bank Mortgage Database. Banks and thrifts held $1.70 trillion in first-liens in portfolio at the end of the second quarter of 2011, up 0.2 percent from the previous quarter.Portfolio holdings were down 0.9 percent compared with the second quarter of 2010. Bank portfolios are largely being used to hold mortgages that meet underwriting guidelines for the government-sponsored enterprises ... [includes one data chart]

The Treasury Department has not sufficiently enforced rules for newer components of the Home Affordable Modification Program, according to a review released last week by the Government Accountability Office. Treasury officials acknowledge that the agency has not met all of the GAO’s recommendations but made no guarantees of tighter enforcement. “Treasury has experienced challenges in implementing the newer Making Home Affordable programs,” the GAO said, citing problems with the Principal Reduction Alternative, Second Lien Modification and Home Affordable Foreclosure Alternatives programs.

Regulators should take stronger actions to ensure that homeowners in need of loan modification are treated fairly and that servicers increase their efforts to implement newer Making Home Affordable (MHA) programs, according to a new Government Accountability Office report. The GAO said that while the Department of the Treasury has taken a number of steps to implement its previous recommendations to improve the program, it has not yet taken steps to improve servicer oversight, among other recommendations made by the watchdog agency. Treasury began publishing quarterly assessments of servicer performance under the Home Affordable Modification Program and...

The housing meltdown revealed a lot of unsafe lending practices, but some advocates say the mortgage industry may be ignoring successful strategies for expanding homeownership by restricting new lending to only those with squeaky-clean credit. “The lesson of the financial crisis can’t be that homeownership is bad, or only for a small group,” said Judith Jacobson, the deputy director and general counsel for the Massachusetts Housing Partnership during a panel discussion hosted by progressive nonprofit Center for American Progress this week. Jacobson and others described programs developed in Massachusetts and North Carolina that...

Mortgage lenders and servicers with large portfolios of seriously delinquent home loans have turned to “liquidating trust” structures as a financing alternative – with good results, according to credit rating agency DBRS. So far, the performance of six nonperforming loan securitizations with 14 outstanding tranches rated by DBRS has been stable and largely within expectations at the time of rating, said Quincy Tang, the rating agency’s senior vice president of structured finance. As of Sept. 6, all rated classes of one transaction (Residential Loan Trust 2008-2) have been paid in full, said Tang. The Class A notes in...

With the mortgage finance industry in turbulence and a fast-changing regulatory landscape, banks have been forced to reevaluate how they optimize processes and become more cost-efficient, making “operational certainty the need of the hour,” according to an expert at a webinar held this week by NelsonHall. The market is seeing an increase in defaults but a decrease in mortgage originations, noted Sandip Sahni, practice head of business process services at Tata Consultancy Services. This has led to mortgage providers having to deal with fluctuations in volume and costs, and in response, service providers are creating more...

State regulators are gradually working through the pile of licensing applications submitted by mortgage companies and loan originators. The total number of unique entities holding state licenses increased 7.2 percent during the second quarter, reaching 140,421, according to an Inside Mortgage Trends analysis of data from the National Mortgage Licensing System. The vast majority of those licenses (76 percent) are held by individual loan officers. Regulators still had some 35,024 licensing applications pending at the end of June, but that was down 23 percent from the previous quarter. And the number of new applications submitted during...